Your Flight Just Got Canceled. Now What?

The recent weather has left many unfortunate travelers stranded in airports and scrambling to reassemble their disrupted trips. The next time you plan a trip, you should consider the one massively under-used financial product that can potentially save you big bucks.

Flying blindWeather-related delays have sidelined more and more travelers in the past few weeks, yet there is only a small minority of passengers who insure their plans for such dilemmas. Based on a Princeton Survey Research Associates International study of frequent travelers, only 21% of responders said they had purchased travel insurance, with only 7% reporting a frequent purchase of the policies.

The bigger issue may be nearly half of the responders said they didn't have a clear understanding of what a travel insurance policy included. With most airlines and cruise liners offering various policies, the abundant availability of travel insurance may actually be working against it.

ItineraryFor travelers with little familiarity of what a travel insurance policy can offer, here's a quick run-down. There are four types of coverage generally provided in these policies:

Trip delay and cancellation

Baggage and personal items

Emergency medical expense

Accidental death

Delays and cancellations were the top reason customers buy travel insurance, according to the Princeton survey. There are generally restrictions for what constitutes a covered cancellation, but illness, loss of income, severe weather, and some others are among those accepted.

For those of you who have suffered through a night in the airport waiting for your rescheduled flight the next morning, delay coverage could have covered accommodations for the waiting period -- though there are restrictions, including the length of the delay.

Baggage and personal items coverage is pretty straightforward. Bag didn't show up on the conveyor belt? Whether it was simply delayed or lost, the policy can cover you for the expense of replacing necessities in the meantime.

Source: Fabio Pozzebom.

Getting sick or injured overseas can be a very scary thing, especially if you're not sure how you'll afford medical care. Most policies will provide you with a specified dollar amount for both medical and dental coverage, as well as medical evacuation, when available.

Finally, no one likes to think that their vacation can go so wrong, but accidental death of yourself or a loved one can lead to plenty of expenses. Travel policies often give you coverage in the event something happens to you.

Getting the most out of your benefitsThere are obvious pluses for purchasing a travel insurance policy. But there are a few things that you should consider first.

Source: Tour Pro Golf Clubs.

The most important thing you should keep in mind when traveling is knowing your needs. Traveling on an international golf or ski trip? Carrying the expensive equipment could be reason enough to insure your trip. The same can be said if you are going on an adventurous trip where you could get hurt or sick -- the medical coverage can be a nice safety net.

But the coverage afforded by travel insurance can be redundant to the insurance policies you already have. Both car and home insurance policies can afford you coverage for theft or loss of your possessions, even when you're not home. Traveling within the country can make it easier to get medical attention if you're injured.

What this means is that you need to read the fine print of your existing policies and the one you are thinking of buying.

ProvidersIf you think you need travel insurance, there are a number of places you can buy it. Haven't booked your airline tickets yet? Look up the insurance options offered by the airline. Allianz (NASDAQOTH: AZSEY) and Travel Guard are the two most popular insurers with the airlines, the latter servicing the smaller carriers, like Virgin, Spirit, and Frontier.

Another option is to look at the offerings from your credit card company. American Express (NYSE: AXP) offers travel services, including insurance, for its customers who use their AmEx cards to book the trips and related travel or accommodation reservations. Visa (NYSE: V) and MasterCard (NYSE: MA) team up with any number of travel-related businesses, including airlines and hotels, with the resulting cards offering similar coverage for travel.

There are also independent carriers that offer travel coverage. You can use a comparison site like InsureMyTrip.com or SquareMouth.com to see what rates will give you the best coverage for your trip.

Often, there are price differences between the coverage offered through the airline/cruise line and those that you'll find on the comparison sites. The lesson is to shop around for the best deal that fits your needs.

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